The new Comcast Xbox Xfinity app is the first nail in net neutrality’s coffin

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Comcast recently announced that Xbox users who subscribe to the company’s Xfinity TV service will now be able to access Xfinity On Demand content on their Xbox 360s — and that doing so won’t count against your 250GB data cap. The cable provider’s new policy has touched off a firestorm of criticism from net neutrality advocates, who point to the decision as proof of just how toothless the FCC’s Open Internet rules are.

One of the challenges of discussing net neutrality is that situations like this can be difficult to understand. Comcast is giving its Xbox-owning subscribers access to content without counting it against their download quota. On its own, that’s great, but the larger trends are disturbing — even harmful.

This is Comcast’s first attempt to distinguish between bits which it delivers for “free” and those it doesn’t. The company claims that “content is being delivered over our private IP network and not the public Internet,” but that’s a meaningless distinction given that Comcast owns the entire pipe and can arbitrarily create private networks any time it’s convenient to do so.

Images like this explain net neutrality, but don't assume the end user is the person being billed.

Comcast’s FAQ strongly implies that Microsoft is compensating it in some fashion for the new service; the document states several times that the Xfinity app is only available to those with an Xbox Live Gold subscription. Streaming from the Xfinity site or using the Xfinity App is still done “over the public Internet” and counts against a user’s bandwidth quota. For companies like Comcast, which has railed against the concept of being a dumb pipe, Microsoft’s decision to pay it for free access for Xbox Gold users is a major coup.

With Microsoft on board, Comcast has taken the first steps towards creating a “pay to play” environment. Good companies, meaning those willing to pay for the privilege, are bundled and offered as part of a premium access package in which customers pay an additional fee in exchange for unmetered access to certain sites.

For once, even Apple iPad owners are left out in the cold.

This hurts consumers in two ways. First, it creates a toll road structure in which any startup or new data service has to pay the Comcast tax or risk being choked out by its own success as angry customers blame the nascent company for high bills or degraded service. Second, it creates a market in which companies have enormous incentive to misrepresent the risk of broadband use in order to make a higher price bracket seem more attractive. The best part about such a service is that it doesn’t require Comcast to lower its existing 250GB cap or try to offer a premium service with lower latency and better service guarantees. The FCC debates over net neutrality last year demonstrated that both of these options are highly unpopular with consumers and, in some cases, technically difficult to achieve.

Selling you the right to unmetered access, in contrast, is simple. Comcast doesn’t have to lie or even obfuscate; selling consumers services they don’t need and will never take advantage of is virtually enshrined in the US Constitution. The ad copy nearly writes itself: “Want to stream HD TV shows and movies to your phone or tablet, but concerned about the bandwidth? New Comcast XFinity Pass takes care of it. For just $4.99 a month, you can stream all the Xfinity TV you want — or, for $9.99, get unlimited streaming from YouTube, Netflix, Blockbuster, Vudu, DailyMotion, and the UltraViolet movie service.”

Would there be a handful of users who “exploit” such offers? Sure. There always are. But the overwhelming majority of people who signed up for such a service would be paying extra money for something they’ve already bought. There are only two valid market forces that should dictate broadband price — time and quantity. Of the two, the former is more important than the latter; the marginal cost of an extra 1MB/s of bandwidth in downtown San Francisco is much higher at 4:30 PM than it is at 4:30 AM.

Free Xfinity service for Comcast’s Gold Xbox Live subscribers is a nice deal, in and of itself, but it’s the first step towards monetizing the idea that Comcast has the right to determine which bits are free, and which aren’t. It gives the company a sledgehammer to wield in price negotiations and an artificial carrot it can sell to customers who have only the vaguest idea how much bandwidth they use. It builds a further layer of obfuscation between the actual cost of network access and what customers perceive as a fair market price, and it serves the best interests of no one — except Comcast itself.

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